Alternative methods exist for the measurement of the pension obligation (liability). Which measure requires the use of future salaries in its computation

In accounting, the measure that requires the use of future salaries in its computation is projected benefit obligation.

What is projected benefit obligation?

A projected benefit obligation can be regarded as an actuarial measurement of the nerds of a company so as as to cover future pension liabilities at that time.

It should be noted that projected benefit obligation always take an assumption that there wont be a terminated plan in foreseeable future.

Therefore, Alternative methods exist for the measurement of the pension obligation can be regarded as projected benefit obligation.

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Projected benefit obligation

Explanation: The projected benefit obligation is a method employed in the calculation of pension liability or expenses. The projected benefit obligation determines the amount an organization will have to sidea side into a pension benefit scheme or plan which will be adequate enough to cater for the pension or entitlement of the company's employees while also incorporating expected Increment in salaries of workers in it's computation. In preparing a projected benefit obligation, factors which are considered and incorporated in the calculation includes but not limited to ; future rise in employees salaries, estimated years of service.

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